Wall St's five-day rally ends

By AAP |
12 Jan 2019, 07:57 AM

Wall Street has closed a touch lower, breaking a five-session rally, as energy shares declined and investors looked ahead to earnings season, which kicks off next week with Citigroup, JPMorgan and other big banks.

The Dow Jones Industrial Average fell 5.97 points, or 0.02 per cent, to 23,995.95 on Friday, the S&P 500 lost 0.38 points, or 0.01 per cent, to 2,596.26 and the Nasdaq Composite dropped 14.59 points, or 0.21 per cent, to 6,971.48.

Underpinned by optimism over China-US trade talks and expectations of a slow pace of interest rate hikes from the Federal Reserve, the stock market's winning streak through to Thursday added six per cent to the S&P 500 and left it up about 10 per cent from the 20-month low it hit around Christmas.

The S&P 500 on Friday ended down just 0.01 per cent after recovering from a loss of 0.74 per cent earlier in the session.

"We've clawed our way back and now the market is just waiting ahead of the start of earnings season next week," said Donald Selkin, Chief Market Strategist at Newbridge Securities in New York. "We're just drifting."

The S&P energy index was off 0.63 per cent, leading declines among 11 sectors, as oil prices dropped after nine days of gains.

JPMorgan Chase, which reports on Tuesday, declined 0.48 per cent. Some bargain hunters are betting on a stronger 2019 for banks after the S&P 500 bank index fell 18.4 per cent in 2018.

US stocks took a severe beating in the last quarter of 2018 due to worries over trade, interest rate hikes and a slowdown in global growth.

Analysts expect S&P 500 companies' earnings per share to grow by 6.4 per cent this year, compared with 23.5 per cent in 2018, when they were supercharged by newly enacted corporate tax cuts, according to IBES data from Refinitiv.

General Motors gave a strong earnings forecast for 2019, sending the automaker's shares surging 7.05 per cent.

For the week, the S&P 500 rose 2.5 per cent, the Dow added 2.4 per cent and the Nasdaq picked up 3.4 per cent.

Netflix rose 3.98 per cent, bringing its gain in 2019 to 26 per cent, helped by analysts' optimistic forecasts for subscriber growth ahead of its earnings next week.

Activision Blizzard slumped 9.37 per cent, the most on the S&P 500, after it transferred publishing rights for its "Destiny" video game franchise to Bungie.

Advancing issues outnumbered declining ones on the NYSE by a 1.23-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favoured advancers.